How long can i hold a margin position in binance

How to open a Margin Trading account on Binance

After logging in to your Binance account, move your mouse to the top right corner and hover over your profile icon. This will be different for everyone and will show the first two characters of your email address. When the dropdown opens, click on your email to go to your account dashboard.

If you don’t know what margin trading is, we recommend reading our article What is Margin Trading before opening your margin trading account on Binance.

You will now be on your account dashboard. You can see your account balances from this page. Below “Balance Details”, click on “Margin” to begin the process of opening your margin trading account on Binance. You will need to have completed identity verification (KYC) and make sure your country is not on the blacklist. It is also mandatory that you enable 2FA.

Next, you will see a pop-out window about the margin trading quiz. Please complete it and, if you are willing to proceed, click on the “Start the Quiz” button.

How to transfer funds

After activating your margin account, you will be able to transfer funds from your regular Binance Wallet to your Margin Trading Wallet. To do so, click on the “Wallet” tab, select “Margin” and click on the “Transfer” button on the right side of the page.

Next, select which coin you wish to transfer. In this case, we will use the BNB.

Input the amount you want to transfer from your Exchange Wallet to your Margin Wallet and click “Confirm transfer.”

How to borrow funds

After transferring BNB coins to your Margin Wallet, you will be able to use those coins as collateral to borrow funds. Your Margin Wallet balance determines the amount of funds you can borrow, following a fixed rate of 5:1 (5x). So if you have 1 BTC, you can borrow 4 more. In this example, we will borrow 0.02 BTC.

After selecting the coin you wish to borrow and the amount, click “Confirm Borrow.”

Next, your margin account will be credited with the Bitcoin you borrowed. You will now be able to trade the borrowed funds while having a debt of BTC plus the interest rate. The interest rate is updated every 1 hour. You can check the currently available pairs as well as their rates on the Margin Fee page.

You can check your current margin account status by going to your “Wallet Balance” page and selecting the “Margin” tab.

The Margin Level

On the right side of the screen, you will see your margin level, which gives you a risk level according to the borrowed funds (Total Debt) and to the funds you hold as collateral on your margin account (Account Equity).

The risk level changes according to the market movements, so if the prices move against your prediction, your assets can be liquidated. Note that in case you are liquidated, you will be charged extra fees.

The formula to calculate the margin level is:

Margin Level = Total Asset Value / (Total Borrowed + Total Accrued Interest)

If your margin level drops to 1.3, you will receive a Margin Call, which is a reminder that you should either increase your collateral (by depositing more funds) or reduce your loan (by repaying what you’ve borrowed).

If your margin level drops to 1.1, your assets will be automatically liquidated, meaning that Binance will sell your funds at market price to repay the loan.

Click on “Positions” to check detailed information about your current positions. If you prefer to see the values in USDT, select “USDT Benchmark” on the right side.

How to trade on margin

If you wish to use your borrowed funds to trade, you can go to the Margin page, and trade normally using Stop-Limit and OCO orders.

How to repay your debt

To repay your debt, click on the “Borrow/Repay” button and select the “Repay” tab.

The total amount to be paid is the sum of the total borrowed plus the interest rates. Make sure you have the required balance before proceeding.

When you are ready, select the coin and amount you wish to repay, and click “Confirm repayment.” Note that you can only use the same cryptocurrency to make the repayment.

Moving funds back

If you wish to move your funds back from the Margin Wallet to your regular Binance Wallet, click on “Transfer” and use the button in-between the two wallets to change the direction of the transfer. Next, select the coin and amount and click “Confirm.”

You can move your funds freely from one wallet to another, without any fees. But note that if you currently have assets borrowed, your risk level will increase as the funds of your Margin Wallet decrease. If your Risk Level gets too high, there is a chance of your assets being liquidated. So make sure you understand how margin trading works before using it.

An example

Alice believes the price of BNB will go up, so she wants to open a leveraged long position on BNB. To do so, she first transfers funds to her Margin Wallet and then borrows BTC. Next, Alice uses the borrowed BTC to buy BNB.

If the price of BNB goes up as Alice expected, she can sell her assets and repay the borrowed BTC along with the corresponding interest. Any leftover for that trade will represent her profits.

However, margin trading can amplify both the gains and the losses. So if the market moves against Alice’s position, she will have bigger losses.

What are Isolated Margin Trading Positions?

Isolated Margin Trading Positions are used to calculate the cost and profit/loss of a position in historical transactions. The isolated margin position is not dependent on the amount of funds in your account or your borrowing behavior. Instead, it uses cumulative data from historical trades of the trading pair (long and short) to calculate. The position information is recalculated and updated every 5 minutes. For example, if you make a margin trade within the 5 minutes before the system recalculates, the position value and profit/loss calculations will be based on the prevailing calculations.

Why is Isolated Margin Trading Positions calculation useful in trading?

If you open a long/short margin position over a series of transactions, the Isolated Margin trading positions calculation can be used to calculate the average cost of your trades. It is convenient for checking your profit and loss and position value based on your historical trading activity, so you can make better investment decisions.

Frequently Asked Questions

1. How to calculate isolated margin trading positions/cumulative margin positions?

Trading position refers to the net buy (long) / net sell (short) amount of an asset you traded in a particular isolated trading pair since you opened the initial position. For example, if you opened a margin position over a series of transactions, you can use the cumulative calculation to help determine your net position size.

Suppose you opened a BTCUSDT isolated margin position and made a series of transactions following your initial position. The net purchase quantity after each transaction is as follows:

DateTradeQuantityCumulative Net Buy (Trading Position)DirectionT+1Buy10 BTC10 BTCLongT+2Sell7 BTC3 (= 10 – 7) BTCLongT+3Sell2 BTC1 (= 3 – 2) BTCLongT+4Sell5 BTC-4 (= 1 – 5) BTCShortT+5Buy4 BTC0 (= -4 + 4) BTCNull

At T+3, you will have a long position of 1 BTC.

At T+4, you will have a short position of 4 BTC

At T+5, you will have no position.

*Assuming on T+3, you have a long position of 1 BTC and hold 1 BTC in your margin account, you then transferred the 1 BTC to your spot account, i.e. no BTC of assets in your isolated margin account, your trading position will still have a long position of 1 BTC.

2. How to calculate the cost price in isolated margin positions?

For long positions:

Cost Price = ∑ (Buy Quantity * Buy Price) / Position Size (since the initial position was opened)

In this case, any additional long positions following the initial position will be accounted for and recalculated to determine the new cost price.

For short positions:

Cost Price= ∑ (Sell Quantity * Sell Price)/ Position Size (since the initial position was opened)

In this case, any additional short positions following the initial position will be accounted for and recalculated to determine the new cost price.

A weighted average takes into account the quantity and price purchased with each trade. In other words, if you buy an additional 2 BTC, the price you pay will affect the average more than if you bought 1 BTC. When a position returns to zero or changes direction, the cost price will be recalculated.

To help you understand better, please refer to the following example:

DateTradeQuantityExecution PriceTrading PositionCost PriceT+1Buy1 BTC38,000 USDTLong 1 BTC38,000 USDTT+2Buy2 BTC40,000 USDTLong 3 BTC

1*38,000+ 2*40,000)/(1+2)=39,333.333333 USDT

(The cost price has been recalculated as you accumulate more of the same position.)

T+3Sell1 BTC39,000 USDTLong 2 BTC

39,333.3333 USDT

(No additional trades occurred in the same direction. Therefore, the position and the cost price remained unchanged.)

T+4Sell3 BTC45,000 USDTShort 1 BTC

45,000 USDT

(Sold the remaining 2 BTC at 45,000 USDT, and initiated a short of 1BTC at the same price.)

3. What is Floating PNL?

Floating profit and loss is the unrealized profit and loss of a position calculated based on the index price and the cost price. The formula for floating profit is as such:

Long position floating PNL = Position Size × (Index Price – Cost Price);

Short position floating PNL = Position Size × (Cost price – Index price).

For example:

Long trade:

Suppose you hold a long 3 BTC position in the BTCUSDT isolated pair, and the cost price is 40,000; the index price of BTCUSDT is 50,000. Your floating profit and loss will be = 3*(50,000 – 40,000) = 30,000 USDT.

Short trade:

If you hold a short 3 BTC position while the cost price and index price remain unchanged, your floating PNL will be = 3*(40,000 – 50,000) = -30,000 USDT

4. What is Total PNL?

Total PNL refers to the total profit and loss of your positions.

Total PNL is calculated as = Net Buy Quantity (of all previous trades)*Index Price – Net Buy Market Value

*Net Buy Quantity = Quantity of Buy order position – Quantity of Sell positions (trade asset)

Net Buy Market Value = Amount of buy orders traded – the number of sell orders traded (quote asset)

*Note: The PNL calculation in Margin Order History also uses the total PNL calculation, you can go to Margin Order History and select a specific time period for the PNL calculation.

For example, here are the trade details of a BTCUSDT isolated pair:

DateTradeQuantityExecution PriceT+1Buy10 BTC30,000 USDTT+2Sell7 BTC32,000 USDTT+3Sell2 BTC33,000 USDT

Assume the latest index price of BTCUSDT is 36,000.

Net Buy Quantity = 10 – 7 + 2 = 5 BTC

Net Buy Market Value = 10*30,000 + 2*33,000 – 7*32,000 = 142,000

Total profit/loss = 5*36,000 – 142,000 = 38,000 USDT

5. What is Realized PNL?

Realized PNL refers to profit or loss of your completed trades. It can be calculated by this formula:

Realized PNL = Total PNL – Floating PNL

Let’s refer to the above table. Suppose the latest index price of BTCUSDT is 36,000.

Your position size on T+3 will be 5 BTC

The cost price of each BTC is 10*30,000 + 2*33,000) /12 = 30,500 USDT.

Your realized profit and loss is 38,000 – (5*(36,000 – 30,500)) = 10,500 USDT.

Written by Jane